The SEC instituted settled cease-and-desist proceedings against Ingram Micro Inc. (Ingram Micro), a computer technology distribution company based in Santa Ana, California, finding that the company violated the books and records and internal controls provisions of the securities laws in the course of its business dealings with McAfee, Inc., formerly known as Network Associates, Inc. (McAfee) during a period when McAfee was engaged in a financial fraud. As part of the settlement with the Commission, Ingram Micro will pay disgorgement of $15 million.

This is the final enforcement action arising out of the Commission's investigation into the McAfee financial fraud. In January 2006, the Commission charged McAfee with carrying out a channel-stuffing scheme from 1998 through 2000, in which it employed various manipulative accounting artifices and secretly provided its distributors with substantial cash payments, price discounts, rebates and other concessions to continue buying and to not return excess inventory. . The Commission found that, from the second quarter of 1998 through the third quarter of 2000, Ingram Micro engaged in a variety of highly irregular transactions with McAfee, many lacking economic substance, that enabled McAfee to oversell its products to Ingram Micro and report materially inflated revenues from those sales in its public statements and Commission filings. Ingram Micro, which was McAfee's single largest source of sales, was compensated by McAfee for engaging in these irregular transactions through the payment of millions of dollars of unearned profits, cash payments, and excess inventory fees.

The Commission found that Ingram Micro's books, records, and accounts failed to accurately and fairly reflect its transactions with McAfee, and that Ingram Micro failed to devise and maintain a system of internal controls sufficient to provide reasonable assurance that its transactions were executed in accordance with management's general or specific authorization. Ingram Micro was ordered to cease and desist from committing or causing any violations and any future violations of Sections 13(b)(2)(A) and 13(b)(2)(B) of the Securities Exchange Act of 1934, and ordered to pay disgorgement of $15 million.